Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Resignation of Thomas J. Leonard as Chief Executive Officer
On January 6, 2023, Thomas J. Leonard, Chief Executive Officer and a member of
the Board of Directors (the "Board") of Agiliti, Inc. (the "Company"), notified
the Chairman of the Board of his decision to retire and resign from his position
as Chief Executive Officer of the Company effective as of March 10, 2023 (the
"Resignation Date"). Subsequent to the Resignation Date, Mr. Leonard will remain
employed by the Company in an advisory role though March 31, 2023 (the
"Transition Date"). Mr. Leonard will continue to serve as a member of the Board
indefinitely.
On January 6, 2023 (the "Effective Date"), Mr. Leonard and the Company entered
into a Transition Agreement (the "Transition Agreement"), pursuant to which,
from the Effective Date through the Transition Date, Mr. Leonard will
(i) continue to receive his current annualized base salary as provided pursuant
to his Employment Agreement, dated March 5, 2019, by and between Mr. Leonard and
the Company (the "Employment Agreement"), (ii) be eligible to receive an annual
bonus with respect to the 2022 fiscal year in an amount determined based on the
criteria set forth in the Company's annual bonus plan and payable in a lump sum
at the same time as other executives of the Company (iii) continue to vest in
his equity awards that are outstanding as of the Effective Date pursuant to the
terms of the applicable award agreements and (iv) subject to his execution of a
release of claims, be eligible to receive a pro-rata annual bonus at target
performance for the portion of the 2023 fiscal year that has elapsed prior to
the Resignation Date, payable in a lump sum on the Transition Date.
Additionally, during the portion, if any, of the period between the Transition
Date and December 31, 2023 in which Mr. Leonard is eligible to and elects to
continue coverage for himself and his eligible dependents, if any, under the
Company's group health plans pursuant to the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended, the Company shall, at its option, pay or
reimburse Mr. Leonard on a monthly basis or the difference between the amount
Mr. Leonard pays to effect and continue such coverage and the employee
contribution amount that similarly situated employees of the Company pay for the
same or similar coverage under such group health plans.
On the Resignation Date, provided that Mr. Leonard executes the release of
claims attached to the Transition Agreement, Mr. Leonard will receive the
orderly transition benefits set forth in the Employment Agreement (the "Orderly
Transition Benefits"). The Orderly Transition Benefits include (i) the vesting
on the Resignation Date of any of his stock options that are scheduled to vest
in the 24 months following the Resignation Date and (ii) deemed satisfaction of
the time vesting component of all outstanding performance restricted stock units
("PRSUs") held by Mr. Leonard with respect to a pro-rated portion of the PRSUs
based on (A) the number of days Mr. Leonard would have provided services during
the applicable performance period if he had continued to provide services to the
Company through the second anniversary of the Resignation Date in comparison to
(B) the total number of days in the applicable performance period. Those PRSU
awards will remain subject to achievement of the applicable performance metrics.
In addition, as of the Transition Date, Mr. Leonard will also be entitled to
receive the same cash and equity compensation provided to other non-employee
directors of the Board for his service as a non-employee director.
The Transition Agreement also provides for customary restrictive covenants with
a restricted period of two years, commencing on the date on which Mr. Leonard's
service as a non-employee director of the Board terminates, including a
non-solicitation of employees, a non-compete and an indefinite non-disclosure
provision.
Appointment of Thomas W. Boehning as Chief Executive Officer
On January 6, 2023, the Board appointed Thomas W. Boehning, who currently serves
as the Company's President, as Chief Executive Officer to succeed Mr. Leonard
effective as of the Resignation Date. In addition, the Board approved, that
effective as of the Resignation Date, the size of the Board will be increased
without any further action and appointed Mr. Boehning as a Class III director
effective as of such date.
In connection with his appointment as Chief Executive Officer, Mr. Boehning and
the Company entered into an Amended and Restated Employment Agreement, effective
as of January 10, 2023, (the "A&R Employment Agreement"), which will replace his
current employment agreement with the Company as of such date.
Pursuant to the A&R Employment Agreement, Mr. Boehning is entitled to receive an
annualized base salary of $978,500, subject to such increases, if any, as may be
determined from time to time in the sole discretion of the Board. Additionally,
Mr. Boehning will be eligible to earn an annual bonus of 100% of his base
salary, based upon his achievement and the Company's achievement of annual
performance targets established by the Board at the beginning of each such
calendar year. In addition, Mr. Boehning will be eligible to receive annual
awards under the Agiliti, Inc. 2018 Omnibus Incentive Plan, or such other equity
incentive plan of the Company as may be in effect from time to time, with such
amounts and on such terms and conditions as the Board or a committee thereof
shall determine, and subject to the terms and provisions of the incentive plan
as in effect and the award agreements evidencing such awards.
In the event Mr. Boehning's employment is terminated by the Company without
Cause (as defined in the A&R Employment Agreement) or by Mr. Boehning for Good
Reason (as defined in the A&R Employment Agreement) (in each case, other than
due to death or disability), then Mr. Boehning will be entitled to:
(i) (1) payment of his accrued and unpaid base salary, (2) payment for any
accrued but unused vacation days, (3) payment of any earned but unpaid annual
bonus with respect to the year prior to the year of termination and
(4) reimbursement of out-of-pocket expenses accrued in connection with the
performance of Mr. Boehning's duties under his A&R Employment Agreement, in each
case of (1) through (4), accrued through the date of termination and (5) all
other accrued amounts or accrued benefits due to Mr. Boehning in accordance with
the Company's benefit plans, programs or policies (other than severance). (the
"Accrued Benefits"); (ii) if the termination occurs prior to a Change in Control
or more than two years after a Change in Control, an amount equal to the sum of
(A) 12 months of Mr. Boehning's base salary and (B) Mr. Boehning's target bonus
opportunity for the year of termination, payable in substantially equal
installments over the 12-month period following the date of termination;
(iii) if the termination occurs on or within two years after a Change in
Control, an amount equal to the sum of (A) 24 months of Mr. Boehning's base
salary and (B) two times Mr. Boehning's target bonus opportunity for the year of
termination, payable in a lump sum; (iv) a lump-sum payment equal to a pro-rata
portion of Mr. Boehning's annual bonus for the year of termination (the
"Pro-Rata Bonus"); (v) a lump sum payment equivalent to the amount the COBRA
premium would be for his health coverage prior to the termination (for
Mr. Boehning and his family to the extent applicable) multiplied by twelve;
(vi) immediate vesting as of the date of termination of any options and
restricted stock units that would have otherwise vested during the 12 months
following such termination of employment or, if Mr. Boehning's termination of
employment occurs on or within one year after a Change in Control, immediate
vesting as of the date of termination of all such awards and (vii) performance
restricted stock units will vest based on actual performance through the date of
termination and projected performance from such date of termination through the
end of the applicable performance period, with the shares earned pursuant to
such performance restricted stock units prorated based on the number of days
Mr. Boehning would have been employed during the performance period if
Mr. Boehning had remained employed through the first anniversary of the date of
termination in comparison to the total number of days in the performance period
or, if Mr. Boehning's termination of employment occurs on or within one year
after a Change in Control, such awards will vest based on the greater of
(A) actual performance as of the Change in Control, as determined by the
compensation committee in its sole discretion, and (B) target performance.
In the event Mr. Boehning's employment is terminated by the Company with Cause
or by Mr. Boehning without Good Reason (in each case, other than due to death or
disability), then Mr. Boehning will be entitled to the Accrued Benefits. In the
event Mr. Boehning's employment is terminated by the Company due to
Mr. Boehning's death or disability, then Mr. Boehning will be entitled to:
(i) an amount equal to the sum of 12 months of his base salary in effect
immediately prior to his termination, (ii) the pro-rata bonus, and (iii) the
Accrued Benefits.
Payment of the foregoing benefits in each case is conditioned upon
Mr. Boehning's compliance with his ongoing obligations to the Company and timely
execution of required agreements as specified in the A&R Agreement. The A&R
. . .
Item 7.01. Regulation FD Disclosure.
On January 9, 2023, the Company issued a press release announcing the CEO
succession described above. A copy of such press release is attached hereto and
furnished as Exhibit 99.1 to this Current Report on Form 8-K.
The information contained in this Item 7.01 and Exhibit 99.1 hereto shall not be
deemed "filed" for purposes of Section 18 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), nor shall it be deemed incorporated by
reference in any filing under the Securities Act of 1933, as amended, or the
Exchange Act, except as expressly set forth by specific reference in such
filing.
Item 9.01. Financial Statements and Exhibits.
Exhibit
Number Description
10.1 Transition Agreement, dated as of January 6, 2023, by and between
Agiliti, Inc. and Thomas J. Leonard
10.2 Amended and Restated Employment Agreement, effective January 10,
2023, by and between Agiliti, Inc. and Thomas W. Boehning
99.1 Press Release, dated January 9, 2023
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
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